Profits that reflect only the falling real value of a business’s capital and inventories get taxed, costing it the real resources it needs to reinvest. [...] Established when the GST was introduced in 1991, the goal of the $450,000 threshold was to relieve all but the most expensive homes from the tax. [...] Many other nominal markers – such as the small-supplier threshold for charging GST, the $1,000 exemption from capital gains tax for personal property, the exemption for foreign employees in the Canada-US tax treaty, and amounts that returning travellers can bring into Canada duty-free – have not changed for decades. [...] Inflation is down from its 2022 peak, but even if it returns to the Bank of Canada’s target of 2 percent next year, as the Bank projects, the purchasing power of a dollar will still be some 15 percent lower than it was before the post-COVID surge in prices. [...] The indexing of personal income tax thresholds in Nova Scotia’s budget therefore deserves attention, praise and – most of all – imitation.
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